Sunday, August 01, 1999

P&G changes its world


Company concentrates global advertising in fewer agencies

BY RANDY TUCKER
The Cincinnati Enquirer

        The world is becoming a smaller place as consumers from Sarajevo to Cincinnati eat Pringles, brush with Crest and wash clothes with Tide. As a result, Procter & Gamble Co., the Cincinnati-based maker of those household products, is planning its business on a worldwide scale. That includes advertising.

ADVERTISING POWERS
  Top 10 companies ranked by total U.S. ad spending on brands in 1998:
  1. General Motors, $2.1 billion.
  2. Procter & Gamble, $1.7 billion.
  3. DaimlerChrysler, $1.4 billion.
  4. Phillip Morris, $1.3 billion.
  5. Ford Motor, $1 billion.
  6. Time Warner, $831 million.
  7. Walt Disney, $810 million.
  8. Sears, Roebuck, $722 million.
  9. Unilever, $691 million.
  10. Diageo, $671 million.
  Source: Competitive Media Reporting
        As P&G pushes to sell more goods abroad, it has consolidated advertising for most of its global brands at either one or two agencies.

        The move fits well into P&G's current restructuring — known as Organization 2005 — which is designed to streamline operations, promote global brand development and get those products into consumers' hands faster.

        The same dynamic is at work in P&G's “Agency Relationship Renewal” program, the formal name for company's brand-ad agency realignment efforts.

        “By having one or two agencies (working on global brands), it really does help with getting our ideas out to the consumer more quickly,” said Bob Wehling, P&G's global marketing officer. “More than two, we think, is a complication.”

        The new strategy should also resonate with consumers, Mr. Wehling said.

        “When a consumer sees a message from one of our brands, we want to know if it is relevant to her, does it fit in with her life, is she persuaded by the way we have given her the message to go buy the product,” he said.

        The answers to those questions may vary in different parts of the world, where cultural considerations and market conditions can influence consumers' perceptions of products.

        Mr. Wehling said P&G's ad agencies must take those factors into account. Just because one agency might be handling advertising for a global brand doesn't mean the same ad will appear on TV screens across the world, he said.

        “With Pringles, for example, we may take it into some countries where they don't have potato chips and to other countries where there are dozens of competing potato chip brands,” he said. “We may have the same strategy and basic brand equity globally, but the advertising is going to look different in different parts of the world.”

        P&G is among a number of U.S.-based companies that have consolidated their advertising.

        For example, Heinz — the fifth-largest U.S. food company, whose Heinz Pet Products and Starkist Foods are based in Newport — last year consolidated its worldwide advertising for ketchup with Leo Burnett.

        Heinz joined Colgate Palmolive and Citibank as U.S. companies using a single agency to produce all their advertising.

        Mr. Wehling emphasized that P&G is not planning to reduce the total number of ad agencies it uses — about a dozen — just the number of agencies working on particular brands.

        “The number of agencies we have as a company is about right,” he said. “We need that many agencies to cover the hundreds of brands that we've got.”

        With a worldwide ad budget of about $3.7 billion, P&G markets more than 300 brands to billions of consumers in more than 140 countries.

        Four major U.S. agencies — New York-based Grey Advertising, Saatchi & Saatchi and D'Arcy Masius Benton & Bowles and Chicago-based Leo Burnett — handle the bulk of the global advertising.

        Several regional agencies in the U.S. and abroad handle other advertising, including interactive and ethnic marketing.

        Regardless of their brand responsibilities, Mr. Wehling said, P&G expects the same results from all of its ad agencies: increased market share for its brands.

        “Speed is a part of it,” Mr. Wehling said. “But what we want is a greater percentage of our brands building (market) share.

        “Right now, we have about half of our brands building share,” he said. “We want to have well over 80 percent of our brands building share.”

        Dramatic realignments in the advertising field help manufacturers build stronger alliances with their ad agencies by eliminating some levels of the decision-making hierarchy, said Jack Neff, who covers advertising for the industry publication Advertising Age.

        “Basically, it aligns the agencies more closely with the management structure,” he said. “Since P&G is really managing brands and categories on a global basis, it makes sense to have a global agency working on them.”

        P&G's Mr. Wehling agreed: “If you have too many ad agencies, quite frankly, it's very hard for our top management ... to find the time to invest with several agencies.”

        Using only one or two agencies also helps reduce the in-fighting among agencies working on the same brands that often keeps ad campaigns from getting off the ground faster, Mr. Neff said.

        “There have been times in the past where they (P&G) would take a concept developed by an agency in one country and apply it to the same brand or a similar brand in a different country, using a different agency,” he said.

        “Realistically, doing that kind of thing is always difficult because one agency is not going to be that thrilled about applying the creative product developed by another agency,” he said. “There are always going to be turf battles, but I think you eliminate those by going with just one or two agencies.”

Ad agencies' pay linked to sales, not billings
       



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